Matthew Greenfield 11:50
Yeah. So I think one of the secrets to being a successful venture capitalist is thrifty, recycling of people. So in my first venture career, I was primarily investing in communications equipment companies, and I helped put together one called synergetics. It was a group of engineers from what was an Apollo computer, which was acquired by HP. And cybernetics ended up getting acquired by threecom, and at its peak as a division of threecom, had over a synergetic dollars of revenue. And the way it was founded was that I went to a standards committee meeting for a new networking standard, and met teams from at least 15 different companies, all of whom wanted to lead their big company employers and start new businesses, not one of whom had ever met a venture capitalist before. This was a more innocent time, and so I lived with the founders in their homes on and off for a couple of months, helping them to write a plan and to raise their essentially pre seed and seed financing. And then, many years later, I was at the annual meeting of a venture firm that was one of the investors, and a large, burly, bearded guy came up to me with his arms open to give me a hug. And I looked at his name tag, and I said, Oh, Dave, he had been the junior most engineer on that and he was now a second time CEO. So he had been director of engineering at another startup backed by my ex boss, and then CEO of two different companies backed by him, that’s very thrifty, right? You know, I’ve always been interested in the way that a Hollywood movie, which is essentially a, you know, $50, $100, $200 million startup, can come together in a matter of months, make a terrific product and then disband. I know plenty of companies that struggle for six or nine months to hire a single key executive, much less you know 200 people. How do they do it? Well, it’s the depth and texture of the relationships, like, if you’re the director or the casting manager. You know the people you want to recruit already, and we don’t have that so much in venture capital, partly because there are just so many opportunities, and there’s a kind of atomization and dispersal. But I think if you do maintain relationships with people. One of the first edtech investments I made was a company called engraved, which managed to recruit a truly spectacularly gifted, really brilliant CTO, rather costly for the stage of the company, but he did a great job. He has now worked for. Were four different companies in the rethink portfolio at one point or another, and done terrific things for each of them.
Brian Smiga 15:11
So one of the reasons we’re so lucky is we’re in the major motion picture business. It just happens a little more slowly in venture but to your point, though, I think there’s some really good studies, and I’ll put them in the chat below, or the comments below, where highly networked VCs outperform others. Those that build, groom, deepen, broaden and deepen their networks outperform. So being a pioneer in edtech, there’s now several great firms that your peer to tell me about your network. You know, the way you think about the network of you and your partners and your associates reaching out into the world is it? Is it mostly founder targeted? Is it who are the pools of relationships that you and your team want to know or do know.
Matthew Greenfield 16:05
I spend a lot of time with people who are quite young, who are trying to figure out their way into education technology. And I also spend a fair amount of time with executives who are looking for their next role. And I had a discussion with someone who is a phenomenal networker himself, who said, you know, you’re not very strategic in the help you offer to people. And he mentioned another venture capitalist who is continually networking just with CEOs, governors, large LPs, right, and clearly targeting people who are in a position to help her. And it’s possible that I am doing it wrong, but I’ve been doing it long enough to see a number of people grow up and become luminaries who give me credit for helping them at a time when they were not such An obvious target for reciprocity. So I think that being a giver in Adam Grant’s terms, you should link to that book is actually not a bad strategy, as long as you don’t let it overwhelm you and prevent you from doing the things you have to do.
Brian Smiga 17:40
Absolutely, we have a phrase at alpha. Innovation happens everywhere. And so you can’t be caddy about where you’re going to find innovation. It’s going to happen for the smallest of venture funds and an unknown founder and an idea that’s so out of the box that it’s not obvious at first, and so I think we really need to remain unbiased and open to founders, and like you said, execs that are looking for their next thing to do. So it sounds like one of your superpowers is taking a business plan and making it more efficient and providing it leverage by aiming it maybe in the right direction, gathering people to spark ideas and fostering relationships with young entrepreneurs and execs looking for their next role. These are all relationship oriented. Is there something you want to add to that list? Because these are good takeaways for any one coming into venture these days to learn from you.
Matthew Greenfield 18:45
First, I want to offer up a sort of parable about the phenomenon you just mentioned. There are lots of stories in different cultures about a king in disguise wandering around the kingdom, and there are also stories in the Bible about angels showing up in disguise on your doorstep. And I think one point about venture capital is you just don’t know who that disguised angel or king is, and so you should be generous and kind wherever you can be with everyone at the same time, you show disrespect for people when you don’t give them honest feedback. And I have occasionally given honest feedback that has been immensely irritating or even enraging to people, right? But usually I think people appreciate honesty like they’ve been talking to dozens of venture capitalists and not getting anywhere, and they don’t understand why tell them what is on your mind.
Brian Smiga 19:51
Yeah. I mean, I would summarize that as generally, and we adhere to this at alpha, is give more than you take, and the more you pay it forward. The more people are going to come back to you and our business model. It’s all about early stage VCs remembering to bring us their growth deal. So we try to be a super connector. Make syndicate introductions, make geographic introductions, knit people together, bring people together. But then I think there’s a nuance here about having the courage to give honest feedback, and that’s difficult. That takes a leap of courage. It’s something that I think we do too little of, and it seems like that’s it. That’s a tool in your toolkit. Well, we’re at the 20 minute mark, and I’d like to hear a little bit more before we go. If there’s one more lesson you want to share about relationships, great, but also, you know, what is the direction of Ed Tech generally, and rethink education specifically, you know, into the rest of this decade.
Matthew Greenfield 20:51
So I haven’t talked about the fundamental mission of my firm, which is to help unlock the full potential of people from vulnerable populations. The reason why I went from Angel and accidental co-founder to venture capitalists was in part because I saw an opportunity right from Amazon Web Services and application programming interfaces and an influx of talent into the education sector, people who wanted to make a difference in the world, created an opportunity. The other thing I saw was that a lot of the venture firms that were investing spasmodically in education companies didn’t understand how people learn. Were intermittently interested in helping people from underserved or marginalized groups, but were just as ready to back companies that would give that little extra edge to the ultra wealthy and didn’t have a sympathy for people across these ecosystems, people in different roles. And so I saw a need to start a business with that focus. My firm has unusually strict social impact criteria. So for example, we won’t back a company that just serves primarily the affluent. There are a lot of companies that serve the interests of institutions, but not the interests of learners. For example, if you do lead generation for colleges, you’re not necessarily ensuring that a student ends up at the right college for that student. You’re just ensuring that the colleges that pay you end up with more students. So I feel like that need to address the actual problems, which involve actual human suffering has not diminished all that much. There’s a lot of suffering out there. There’s also a correlation with alpha right? The biggest cause of death for early stage startups is failure to find product market fit, which you could also think of as failure to find an actual problem that involves human suffering that people really care about and will pay to solve. I make lots of other mistakes, but I do not very often make a mistake back in the company that is not addressing a real human problem that is not currently being well solved.
Brian Smiga 23:37
I think that’s wonderful. That’s the last great takeaway here for folks looking to get in venture from Matt, you heard it focus on where the pain is, where the suffering is, because you can then get product market fit, you’re solving a real need. And if you can measure the impact of technology in eliminating that pain or changing that suffering equation you’ve got, if it’s at a big enough population, you’ve got a great product market fit. I hope I summarize that Well, Matt, for you, and this has been a great conversation. I enjoyed being your friend over the last decade. I look forward to getting a deal done with you. So just in closing, this is the Driving Alpha podcast with Matt Greenfield, our guest from rethink education. And I’m Brian Smiga, the co-founder at Alpha. We invest in mid stage growth rounds. And this podcast is powered by affinity, the CRM, and we can’t live without it, so use it too. All right. There we go, and we use it too. You heard it here.
Outro 24:45
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